The death toll in a disastrous collapse of a rubbish dump in Sri Lanka rose to at least 29 on Monday, as traumatised residents accused authorities of ignoring their previous warnings over the site's safety.

Rescuers continued digging through heaps of mud and rubbish that collapsed onto a clutch of homes near a garbage dump just outside Sri Lanka's capital, killing at least 29 people and possibly burying dozens more.

Hundreds of people had been living in the working-class neighbourhood on the fringe of the towering dump in Meetotamulla, near Colombo, when a huge mound collapsed on Friday night during a celebration for the local new year, damaging at least 150 homes.

By Monday morning, authorities had pulled 29 bodies from beneath the debris, according to lawyer Nuwan Bopage, who has worked with local residents to protest the dump.

Authorities were unsure how many more people could still be trapped, but about 30 were reported missing, Bopage told the Associated Press news agency.

Authorities vowed over the weekend to shut down the dump, which has absorbed much of Colombo's rubbish over several years amid heavy construction and renovations in the capital.

As the rubbish piled up, it began threatening the nearby homes, prompting residents to stage regular protests while complaining of health hazards.

"These people did not choose to live next to a dump. But they brought the garbage in and made this place horrible," said rickshaw driver Dilip Mirmal, 34, whose home was spared while those surrounding were completely subsumed. He counted 23 of his neighbours among the dead.

"This is a government-made disaster," he told the Associated Press news agency.

"I have a mix of feelings - of anger, frustration and sorrow. We have been trying to protest and raise these issues, but no one was listening."

'The whole area was shaking'

On Monday, soldiers were digging with backhoes and shovels, as relatives of the missing pointed out where their houses once stood amid coconut, mango and banana trees.

Those homes now lay in piles of collapsed concrete walls encased in a wall of mud up to eight metres high and mixed with plastic bags, broken glass and other trash.

Bicycles and auto-rickshaws were crushed or lying topsy-turvy.

More than 600 of the area's residents were sheltering in nearby schools, while 11 people were being treated at a hospital for injuries.

One auto-rickshaw driver described a narrow escape. He was returning home with his wife, two sons and daughter when they stepped out from his rickshaw and his daughter said the ground seemed to be moving beneath her feet.

"There was a strong wind from the side of the dump, and my daughter shouted that the mound is splitting," Rasika Sanjeewa, 41, told AP. "Suddenly, one slice of the mound came crashing down. The whole area was shaking."

Debris blocked them from fleeing immediately, but eventually they found a way out, Sanjeewa said.

When they arrived later at their friends' home, where they had planned to celebrate the new year, they found it buried and their friends dead - a mother and daughter who worked as daily wage labourers.